Lawyer Analyzes Benefits Conflict Case

Although 2 justices dissented, all 9 agreed with the conclusion of the 6th U.S. Circuit of Appeals that an insurer that both provides insurance and makes benefit determinations has a conflict of interest.

A majority of the justices also indicated that an employer playing both roles would have a conflict of interest, Serron says.

In Firestone, Serron says, there was no indication that an employer or insurer necessarily acts with a conflict when it handles both roles.

But the decision of the majority includes language that may be helpful for insurers going forward, Serron says.

“In describing the circumstances that would reduce the significance of an insurer’s playing both roles, the majority indicated that, ‘[I]t should prove less important (perhaps to the vanishing point) where the administrator has taken active steps to reduce potential bias and to promote accuracy, for example, by walling off claims administrators from those interested in firm finances, or by imposing management checks that penalize inaccurate decisionmaking irrespective of whom the inaccuracy benefits,” Serron says.